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Gold sets for best week in three on bets of small Fed rate hike

Earlier this week, Jerome Powell said it was time to slow down on raising interest rates. (File)

Gold prices edged lower today ahead of a key US jobs report but were set for their best week in three as the dollar weakened on slowing US Federal Reserve rate hike prospects and signs of cooling inflation.

Spot gold fell 0.3% to $1,796.71 an ounce as of 0247 GMT, having hit its highest in the session since Aug. 10 at $1,804.46. US gold futures were down 0.2% at $1,810.70.

Gold prices have gained about 2.4% in the week so far, which will be their second straight weekly gain.

The dollar index held steady on the day but was headed for a weekly loss of about 1%, weighed down by expectations that a peak in US interest rates was on the horizon.

A weaker dollar makes gold cheaper for overseas buyers.

Following Fed Chair Jerome Powell’s remarks on Wednesday, the dollar declined heavily and that supported the appeal of gold, said Harish V, head of commodity research at Geojit Financial Services in Kochi, India.

“The $1,805 level could act as an immediate resistance for gold, a break above it could trigger fresh rallies,” he added.

Earlier this week, Powell said it was time to slow down on interest rate hikes. Rising rates have put a hold on gold’s traditional position as an inflation hedge this year, as they translate into higher opportunity costs of holding the non-yielding metal.

Investors are now awaiting non-farm payrolls data from the US Labor Department due at 1330 GMT for clues on how the rate hike has impacted the labor market.

Harish V said, “Jobs data will be important for gold as it will indicate the possible actions of the US central bank. Better than expected data can lift the dollar and have an impact on gold prices.”

Spot silver slipped 0.7% to $22.61, platinum was steady at $1,041.38 and palladium was down 1% at $1,922.13.

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